Cohort Analysis models

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What is Cohort Analysis?

Cohort analysis is a branch of behavioural analytics that uses data to categories people into groups based on shared characteristics. Cohort analysis is usually conducted by businesses in order to establish a series of patterns among customers and consumers. Thus, cohort analysis is typically an analysis of the customer base, which categorizes them and finds patterns and thus allows a business to adopt its strategy based on the patterns.

How is Cohort Analysis performed?

There are four key stages when performing cohort analysis:

What is the question? Before beginning your cohort analysis, you must first determine what the question is that you are trying to answer with this analysis. The aim of cohort analysis is to find actionable information that will help you to improve your business. First, you must ask where you want to improve, before analysing the cohort to find out how you can improve.

Metrics: Cohort analysis is often based on a specific event within the user experience, such as a user logging in or out of a website or how much a user paid etc. Before conducting the cohort analysis, you must identify this specific event that you want to analyse.

Relevant cohorts: The final step before performing your analysis is identifying the specific cohorts that you wish to analysis in terms of their customer behaviour. This will help you to understand the differences in user behaviour per different cohort.

Performing: Finally, you can perform your analysis of the cohort in order to find actionable information for your business. Having identified the relevant cohorts, you can analyse their behaviour patterns as customers to see what you may improve as a business.

Why is Cohort Analysis important?

Cohort analysis is an extremely important part of customer retention for your business. It allows you to categorize your customers based on shared experiences or characteristics, find patterns, and better understand your customer’s experience and needs. As such, cohort analysis will allow you to find any faults with the customer experience with your business and identify ways in which it can improve in order to increase customer retention.